Stocks slide
after Fed decision

The major indexes lose more
than 2 percent apiece
on the central bank's remarks

---

By Adam Geller
Associated Press

NEW YORK >> Wall Street fell victim to a late-day selloff today after Federal Reserve policymakers decided not to cut interest rates again, rattling investors who were hoping for such added economic stimulus.

Analysts blamed the stock drop on traders who, in the absence of other news, had been focusing for days on the move by the Fed. When the market began to fall shortly after policymaker's announcement, computer-generated trading exacerbated the selloff.

Declining issues outnumbered advancers by a nearly 5 to 2 ratio on the New York Stock Exchange, where volume was 947.84 million, compared to 766.83 million at the same time yesterday.

The Dow Jones industrial average closed down 206.50, or 2.4 percent, to 8,482.39.

Broader stock indicators also fell. The Standard & Poor's 500 index was down 19.59, or 2.2 percent, at 884.21, and the Nasdaq composite index was down 37.56, or 2.9 percent, at 1,269.28. The Russell 2000 index fell 10.80 to 377.76.

The price of the Treasury's 10-year note was up 1 1/8 point today, while its yield fell to 4.08 percent from 4.21 percent late yesterday. Two-year Treasury notes were up 3/16 point and yielded 1.97 percent, down from 2.07 percent yesterday.

"It's the old story of sell on the news," said Larry Wachtel, market analyst at Prudential Securities. "Today was selling on the news because there's nothing coming along in the dog days of August that's going to change the psychology."

Some investors had bet the Fed would lower rates again, and they sold as the decision to leave rates unchanged was announced. Optimism that the Fed might lower rates contributed to the market's big rally last week, although much of those hopes faded over the weekend.

Analysts said the Fed decision could cause a short-term pullback in stocks as investors with few other obvious reasons to buy questioned the direction of the market.

"Reasons (to buy) at the bottom are never obvious," said Subodh Kumar, chief investment strategist for CIBC World Markets. "Some of those people who were more trading oriented, who were hoping or thinking there might be a rate cut, might move the market lower, but I don't think it will stay that way."

Kumar said stocks could stabilize and rise as scandal-wary investors begin showing more confidence in the veracity of financial results offered by companies, and as companies report earnings that point to a recovery.

A report today by the Commerce Department did little to stir the market. The government said sales at the nation's retailers rose 1.2 percent in July, but most of the gains were the result of strong auto sales.

Investors were also keeping their eyes on tomorrow's deadline set by the Securities and Exchange Commission for companies to certify their financial reports. Analysts say that if many companies miss the deadline, that could further undermine investor faith and prompt stock sales.

Gainers included Wal-Mart, up 57 cents at $48.98 after the nation's largest retailer reported a 26 percent rise in its second-quarter earnings.

J.C. Penney fell 69 cents to $16.06 after the company narrowed its quarterly losses, beating analysts' expectations.

AMR, the parent company of American Airlines, rose 36 cents to $8.72. The airline said Tuesday it will eliminate 7,000 jobs and take other cost-cutting moves.

Overseas, Japan's Nikkei stock average fell 0.6 percent. In afternoon trading, Germany's DAX index rose 1 percent, Britain's FTSE 100 was up 1.2 percent, and France's CAC-40 rose 0.8 percent.